Economics Part 2 Flashcards
What is the transcontinental railroad?
(1869) connected the East to West coast, provided faster transportation which lowered the costs or production
created national markets and new towns
How did the transcontinental railroad contribute to economic growth?
Stimulated the growth of a huge unified national market for American manufactured goods
Who were the sharecropppers?
Former slaves that gave a part of each year’s crop to the landowner and received the rest as payment.
Kept slaves economically dependent.
new south
The South after the Civil War, rebuilt railroads, new textile and steel mills and later new industries, such as oil and coal production.
Tenant Farmers
Farmers who paid cash to rent land.
Capitalism
a business in which many investors own shares (stocks)
Two kinds of businesses that speeded the growth of the American industry
1) monopoly
2) conglomerate
Monopoly
A company or small group of companies that has complete control over a particular field of business. Public utility companies that provide gas or water are examples of current day monopolies.
conglomerate
A corporation that owns a group of unrelated companies.
Achieved through mergers.
Example of Monopoly
E.C Knight Sugar Company (late 1800s)
Example of conglomerate
General Electric
Vertical trusts
controlled all aspects of the production from beginning to sale
Horizontal trusts
grouped related industries for maximum profits
Pool
Competing companies in one field entered into agreements to fix prices and divide business.
Trust
A group of corporations in the same field sometimes agreed to combine under a single board of trustees that controlled the actions of all the member corporations.
Holding Company
a company created to buy and possess the shares of other companies, which it then controls
Andrew Carnegie
Pioneer of the steel industry, sold his steel company for billions of dollars and gave millions to charities. He created the idea of free public libraries across our country.
John D. Rockefeller
Oil refining businessman who used ruthless methods to eliminate competitors. His company, Standard Oil Company controlled over 90% of American oil refining.
J. Pierpont Morgan
This man earned his money by making loans to businesses.
He took over many bankrupt RR and reorganized them & made a profit. He also controlled electrical, insurance, and shipping companies.
Henry Ford
Revolutionized auto-making by using a moving assembly line that permitted the mass production of cars significantly lowering the cost of production. He also paid workers higher wages and set a standard that enabled laborers to afford such purchases.
Interstate Commerce Act
This act set up an agency that ended railroad abuses. This act set a precedent for federal regulation of interstate commerce.
What factors led the government toward regulating business in the late 1800s?
- periodic downturns in the national economy
- growing criticism of practices that saw big business profit at the expense of the poor/working class
- increasing grassroots political pressure for change
Sherman Antitrust Act
The act prohibited monopolies by declaring illegal any business combination or trust in “restraint of trade or commerce.”
Collective Bargaining
Union members representing workers negotiated labor issues with management. A united group would put pressure on management to achieve their goals.
